Freddie Mac released its 2009 Q1 results, showing a net loss of $9.9 billion, compared to its year ago loss of $151 million.
The Federal Housing Finance Agency, acting as Freddie Mac's conservator, will ask the U.S. Treasury Department for $35 billion from senior preferred stock purchase agreement.
On Sunday, September 7, 2008, U.S. Treasury Secretary Henry Paulson announced a comprehensive plan to place the two largest GSEs under "conservatorship", or temporary control of the U.S. government. The government will fund and operate Freddie for the immediate future, though a return to private operation is possible.
On Monday, August 25, Freddie Mac sold $2 billion of short-term debt, with much stronger bids than anticipated. The sale helped ease investors' fears that Freddie and sister company Fannie Mae would be unable to raise money on the capital markets, making a government bailout more likely. Freddie's shares rose 17% for the day.
After the U.S. Treasury announced that it had gained Congressional approval to essentially bail out mortgage giants Fannie Mae and Freddie Mac if needed, worried investors punished the two companies' shares. The fear is that an infusion of capital from the U.S. government would dilute existing shareholder value to the point of wiping it out entirely.
On July 15, 2008, the SEC enacted a temporary rule limiting the ability of traders to short shares of Fannie Mae and Freddie Mac. The new rule, to be in effect for 30 days, requires that traders to actually hold shares of the two companies before short selling them. This prevents what's known as "naked short-selling", where traders never actually borrow and sell the shares involved.
A Lehman Brothers analyst reported on July 7, 2008, that an accounting change could force Freddie Mac to add up to $29 billion of capital to its balance sheet. Investors also worried about future write downs, sending Freddie's stock down as much as 21% during the day. (1)
On November 20, 2007, Freddie Mac released its earnings report for the third quarter, which revealed a sizable net loss of $2 billion for the quarter. The company said it would seriously consider cutting dividends by 50% to maintain its capital stock.
The stock price for Freddie Mac declined after the regulatory body rejected the company’s request to buy more loans.
